Wednesday, January 24, 2018

Online
piracy deprives copyright owners of their exclusive rights to the proceeds of
their creative works and causes billion-dollar damages to the U.S. economy each
year. Identifying large-scale intellectual property piracy operations is an
important part of combatting such harmful and unlawful activities. TheU.S. Trade Representative's annual
report on Notorious Markets
focuses on online copyright piracy involving stream-ripping websites and
illicit streaming devices. The report’s publication exerts pressure on foreign
governments and private entities to curtail IP piracy in their vicinities.

Released
on January 10, the U.S. Trade Representative’s report for the year 2017 includes
a “Notorious Markets List” intended to highlight “prominent and illustrative
examples of online and physical marketplaces that reportedly engage in,
facilitate, turn a blind eye to, or benefit from substantial [copyright] piracy
and [trademark] counterfeiting.” According tothe report’s press release: “Imports in counterfeit and pirated physical products is estimated at
nearly half a trillion dollars.”Publication of the of Notorious Markets List is intended “to motivate
appropriate action by owners, operators, and service providers in the private
sector of these and similar markets, as well as governments, to reduce piracy
and counterfeiting.”

The Notorious
Markets List identifies the stream-ripping websites that, without
authorization, convert copyrighted music and video content from licensed
streaming sites into files that are downloadable by Internet end users. The
Notorious Markets List draws particular attention to online piracy sites funded
by ad revenue. The report cites awhiteBULLET reportof the top 5,000 IP-infringing
website URLs in the U.S., European Union, and Australia, which found that
“about 25-30% of advertising on websites posing an IP risk are from major
brands.” The List specifically names piracy sites – or alleged piracy sites –
operated by foreign entities and/or hosted in foreign nations, such as France,
Russia, and Vietnam.

The
2017 Notorious Markets Report also focused on the issue of illicit streaming
devices (ISDs). Using piracy apps, ISDs stream or download pirated content from the
Internet. According to the report, ISDs can be “fully loaded” at the time of
sale with piracy-enabling capabilities or ISDs can be “combined with add-ons
after purchase” to access pirated content.

Under
Section 106 of the Copyright Act, copyright owners of sound recordings, motion
pictures, and other audiovisual works have exclusive rights over the
distribution of their works. Copyright owners negotiate detailed licensing
agreement for rights to stream or download copyrighted content to retail
consumers. But ISD-enabled piracy violates the exclusive rights of copyright
owners and also impairs their contract rights contained in licensing agreement
terms of service.

The 2017 Notorious Markets Report describes the economic
consequences: “The growth of ISDs is a troubling threat to the pay TV and other
content industries and undermines incentives for companies to improve services
or offer a greater selection of content in more markets.” Citing findings published by Sandvine in November of 2017, the report
states: “ISD piracy ecosystem, including unlawful device sellers and unlicensed
video providers and video hosts, stands to bring in revenue of an estimated
$840 million a year in North America alone, at a cost to the entertainment
industry of roughly $4-5 billion a year.” Correctly, the report deems it “critical”
for governments and private industries to fight threats from growing ISD
piracy.

On the
good news side, the report explained why certain
online piracy sites were removed from the prior year’s Notorious Markets List,
thanks largely to civil and criminal enforcement efforts by cooperative foreign
governments and industries. The U.S. Trade Representative rightly
commended those overseas anti-piracy efforts.

International
engagement is essential to protecting the exclusive rights of U.S. copyright
holders abroad. The U.S. Trade Representative performs a vital function in this
regard. Hopefully, the 2017 Notorious Markets Report will prompt stronger
enforcement efforts against copyright violations by stream-ripping sites,
illicit streaming devices, and other piracy-enabling platforms in 2018.